President Barack Obama
said Sunday that the
United States expects the value of China's currency to rise
significantly. He vowed to closely monitor over the next several months
how China follows
through on a pledge to introduce more flexibility in the management its
currency.

Obama's
comments at a summit of the Group of 20 industrial and developing
nations came as Chinese
President Hu Jintao took on critics of Beijing's currency policy
by warning that wildly fluctuating currency exchange rates can threaten financial markets.

The value of the yuan, or renminbi (RMB), is a major irritant in China's
relations with the United States.

American manufacturers complain that an
undervalued Chinese currency gives China's exporters an unfair advantage
by keeping the cost of China-made products artificially low.

Before the G-20, China tried to head off
criticism by announcing that it would start allowing its currency to
rise in value against the dollar. But senior Chinese officials have
vowed during the economic summit that they would not bow to outside pressure to allow the currency to rise more
quickly.

Critics in the U.S. Congress and elsewhere
want bolder moves from China.

Obama said that the United States doesn't
expect a large, immediate jump in the value of China's currency, which
would be disruptive to the Chinese and world economies.

"We do expect that as more and more market forces come to
bear, that given the enormous surpluses that China has accumulated, that
the RMB is going to go up and it's going to go up significantly," Obama
said. "And so we are going to be paying attention over the next several
months to make that determination."

But he warned of deep and serious global
economic risks as "exchange rates of major currencies fluctuate drastically and
international financial markets suffer from persistent volatility."

At a meeting Saturday between Obama and Hu, White House officials
said Obama welcomed as a "first step" China's currency announcement. But
Obama, the officials said, noted that implementation of the Chinese
decision would be very important.

China has said its currency is at about the
right level and that trade imbalances stem from other fundamental
problems with the United States and other western economies.

Obama said he would work with congressional
critics of China's currency and with American manufacturers. "We all
have the same interest, and that is the United States can compete with
anybody as long we've got an even playing field," Obama said.